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What is a Debt Snowball Plan?

by | Apr 8, 2013 | Credit Card Debt, Debt Relief, Student Loan Debt

Many debt reduction plans recommend various methods to help consumers pay off debt, and one popular method is the debt snowball plan. 

http://www.daveramsey.com/article/get-out-of-debt-with-the-debt-snowball-plan/

The debt snowball plan involves arranging debts from smallest to largest, and paying off the smallest debts first, while only making minimum payments on the others.  The theory behind the snowball plan is that psychologically paying off a smaller debt in full provides a sense of accomplishment that propels the consumer to tackle each remaining higher debt with greater enthusiasm.  Recently the debt snowball method was recommended in an article about student loan debt.

http://www.guardian.co.uk/money/2013/apr/02/student-debt-project-six-steps-tackling-loans

While the debt snowball plan may work for some consumers, it is important to note that this plan involves a full repayment of all debts, plus interest and fees.  Only two debt plans can involve less than a full repayment of debt: bankruptcy and debt settlement, and for some consumers, paying off debts in full is simply not a realistic option.  Contact a qualified debt settlement attorney and learn about a debt repayment option that does not mean payment in full.

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Kevin Fallon McCarthy

Kevin Fallon McCarthy is the McCarthy Law PLC’s managing attorney and an experienced Phoenix debt attorney. Mr. McCarthy has also worked as general counsel for a large corporation. He has corporate counsel experience in human resource matters, general corporate governance, and union class action litigation.